Thursday, August 21, 2008

Emphasise certifications as a means to building human capital

Given India's terrible elementary and higher education system (ponder the implications of this also), a greater emphasis on certification rather than education might make a lot of sense. Employers want to know that a person has the correct knowledge. An exam should give employers the confidence that this is indeed the case. In India, young people are very good at studying on their own for examinations. Once you start thinking like this, school is a low quality use of your time. I always tell young people in India: never let school come in the way of your education.

Think of the best 50,000 students at the IIT JEE. If they have a good certificate in their hands saying they are really top quality high school students by world standards, that's useful in signalling. And, this knowledge was largely picked up outside of the school system, which is calibrated to a much lower standard.

An excellent example of a certification mechanism which has helped remove entry barriers into the labour market is NSE's NCFM examination. I have met so many young people with weak educational backgrounds, who were able to jump this barrier and start off into successful careers in the financial sector, thanks to this certification exam. And, I have written about the GARP FRM before: it's an internationally recognised certification which delivers better knowledge than any MBA in India.

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